by Chris Black
Most banks, since the bailouts of the Great Financial Crisis, have seen their stocks rally after bottoming in early 2009.
In other words, if you bought bank stocks in February 2009, you would be holding an open profit in most cases.
There are a few notable exceptions, however.
Some examples include what I’ll call the Teetering Three: Citi, Deutsche Bank, and Credit Suisse.
These banks have always been a problem for the Fed and global central banks.
In June 2016, the IMF concluded (https://www.imf.org/external/pubs/ft/scr/2016/cr16189.pdf): “Among the G-SIBs, Deutsche Bank appears to be the most important net contributor to systemic risks, followed by… Credit Suisse” (p. 29).
Sheila Bair, who chaired the Federal Deposit Insurance Corporation (FDIC) during the GFC, inferred that Citi’s lacking ability to survive was well known, and remarked about “the supposedly solvent Citi” in her book from 2012 : “if you wanted to make a definitive list of all the bad practices that had led to the crisis, all you had to do was look at Citi’s financial strategies” (p. 185).
Credit Suisse is, of course, gone .
Citi, like a number of sizable US banks , is insolvent (they cannot withstand a run on uninsured deposits).
Deutsche Bank will be broken up and/or nationalized within a few years – so long that it go relatively painlessly, this is the goal of regulators.